Radio: should it pay to play songs?

Terrestrial radio currently pays songwriters when it plays music, but pays …

Copyright law is an odd beast. Take music broadcasting, for instance: webcasters, satellite radio, and those music stations transmitted through your cable connection all have to pay performance rights 1) to the composers who wrote the song and 2) to the performers who played it. Terrestrial AM/FM radio stations, though, only pay the composer; the performer allegedly gets "free promotion" and so doesn't see a cent. Now, Congress is considering a plan to make radio pay up.

First, a bit of background. Songwriters have long had a full performance right in the US, which is the reason that radio stations alone pay over $450 million a year to rights groups like ASCAP, BMI, and SESAC. Composers also have rights to payment when physical copies of songs are made and sold (like tapes and CDs).

The performers who record those songs only have rights to the physical copies (which now include non-physical digital downloads); Congress has denied them a full performance right for more than 80 years now on the grounds that artists and record labels benefit from the free publicity provided by radio.

Only in 1995 was a limited public performance right offered to the copyright owners of sound recordings. The Digital Performance Right in Sound Recordings Act created a public performance right that, as the name suggests, applies only to digital broadcasts. This includes satellite radio, digital cable music channels, and webcasters, who all have to pay both the composers and the performers when they broadcast music. Only traditional terrestrial radio remains exempt from paying performers.

Time to end radio's exemption?

But as record sales have dried up over the last few years, both artists and labels have sought new sources of revenue, and members of both groups are now pushing hard for the creation of a full performance right that would extend to terrestrial radio. That effort is taking place before Rep. Howard Berman (D-CA), a longtime friend of Hollywood and the recording industry who oversees the Subcommittee on Courts, the Internet, and Intellectual Property. Berman has already held one hearing on the issue this year, and yesterday he presided over another one.

On hand was Marybeth Peters, the US Register of Copyrights (who we spoke with earlier this year). She lobbied hard for the full performance right, telling the subcommittee it is needed to "enable creators of the sound recordings to adapt to the precipitous decline in revenue due to falling record sales."

Charles Warfield was there to speak for the National Association of Broadcasters, which not surprisingly remains unexcited about paying another royalty. Warfield pointed out that Congress has refused to grant such a right for 80 years, and he argued that Congressional action was no way to prop up failing business models.

"What this data suggests is that, in addition to piracy, a major reason for the recording industry's revenue decline is its failure to adjust to the public's changing patterns and habits and how they choose to acquire sound recordings," he said. "Any such shortcoming also was not of broadcasters' making; nor should our industry be looked to as a panacea, through a tax or fee, to provide a new funding source to make up for lost revenues of the record companies."

Peters, in her own testimony, took issue with any description of the new right as a "tax." "This is clearly not the case," she said. "A tax is a charge levied by, and paid to, the state. A payment for use of a property right, on the other hand, is made to the owner of the right and the amount and terms of the payment are set by negotiations between a willing buyer and a willing seller."

New NAB print ad

Despite her argument, the NAB has launched a publicity campaign against the full performance right based largely on fear of a "new tax." The group has launched a radio commercial (.asx) and a print ad to help sell its message.

The NAB points out that the "big international record labels" would actually get a fair chunk of this new money; it won't all go to aging artists who can't retire due to penury (this was the pitch of musician Judy Collins, who told the committee that "many of my musical compatriots are, like me, still on the road touring, because while their music is played on the radio, they are not selling records and have to rely on touring to make ends meet").

On the other hand, webcasters and other digital broadcasters either want the performance right fully applied to terrestrial radio or they want it scrapped altogether in the name of basic fairness. It can be hard enough to compete against entrenched broadcasters without having to pay additional fees that they are not subject to. Especially when those additional fees are about to go up.

The basic problem seems to be that many artists and labels are no longer convinced that radio provides enough promotion to be worth an exemption from the public performance right. With the rise of so many alternative ways to find new music (social networks, Internet radio, blogs, etc.), is radio still the hitmaker it once was?